The UK’s Competition and Markets Authority (CMA) has designated Google Search and Search Advertising with Strategic Market Status (SMS) under the country’s new digital markets regime. This marks a significant step in the UK’s efforts to regulate dominant tech firms and ensure fair competition in digital markets. While Google has expressed support for the CMA’s overarching goals, the tech giant has also issued strong warnings about the potential risks associated with stricter interventions.
What is Strategic Market Status?
The SMS designation recognizes that Google holds a “substantial and entrenched market power” in the UK, controlling over 90% of search traffic. It is the first application of the CMA’s new powers under the digital markets framework.
It is important to note that this designation is not a finding of wrongdoing. Instead, it allows the CMA to introduce targeted and proportionate interventions, also known as Conduct Requirements, to boost competition, protect consumers, and create more choice in the market.
Potential Interventions Under SMS
With SMS, the CMA could mandate a range of measures, including:
- Choice screens allowing users to select alternative search engines
- Fair ranking rules to prevent preferential treatment in search results
- Publisher and AI content controls to ensure transparency and fairness
These interventions aim to level the playing field for competitors while maintaining consumer protection in digital markets.
Google’s Warning on Innovation and Costs
Although Google supports the CMA’s goal of fair competition, the company has warned against overly restrictive regulations that could harm innovation and business growth in the UK. Key concerns include:
- Risk to UK Innovation: Proposed interventions may “inhibit UK innovation and growth,” according to Google’s senior director for competition.
- Slower Product Launches: Regulations could slow AI-driven product releases, potentially causing the UK to lag behind other markets in new technology adoption.
- Increased Costs: Some rules could force businesses to raise prices, impacting consumers directly.
- Learning from Other Jurisdictions: Google urges the CMA to consider lessons from other countries, where excessive regulations reportedly cost businesses €114 billion.
Implications for Consumers and Businesses
The SMS status signals a more controlled environment for Google’s operations in the UK. While there are no immediate penalties or requirements, businesses and consumers may see changes in how search results are displayed, and AI content may become more transparent. Competitors could also benefit from greater opportunities to challenge Google’s dominance in the search and search advertising markets.
Global Context
The CMA’s decision aligns with international trends to regulate tech giants, with similar frameworks under discussion in the US, EU, and Japan. These measures collectively aim to create fairer digital markets, enhance consumer choice, and prevent anti-competitive practices.
Conclusion
The designation of Google Search with Strategic Market Status represents a major step in the UK’s digital market regulation. While Google supports the principle of fair competition, it remains cautious about potential negative impacts on innovation, costs, and market efficiency. As the CMA consults on possible interventions, businesses and consumers alike will closely watch how these regulations reshape the UK search and advertising landscape.
